IBA Compliance Connection

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Are there any regulations governing what interest rate must be paid on Interest on Lawyers’ Trust Accounts (IOLTAs)?

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Yes, the Illinois Supreme Court has issued rules requiring eligible financial institutions to pay an interest rate on IOLTA accounts that is equal to “the highest interest rate or dividend available from the institution to its non-IOLTA account customers” — provided the IOLTA accounts meet the necessary account eligibility guidelines to receive the highest interest rate, such as a minimum balance requirement. 

Additionally, we note that financial institutions are required to remit monthly interest on IOLTA accounts directly to the Lawyers Trust Fund of Illinois.

For resources related to our guidance, please see:

  • Illinois Supreme Court Rule 1.15(f)(2) (“Eligible institutions shall maintain IOLTA accounts that pay the highest interest rate or dividend available from the institution to its non-IOLTA account customers when IOLTA accounts meet or exceed the same minimum balance or other account eligibility guidelines, if any. In determining the highest interest rate or dividend generally available from the institution to its non-IOLTA accounts, eligible institutions may consider factors, in addition to the IOLTA account balance, customarily considered by the institution when setting interest rates or dividends for its customers, provided that such factors do not discriminate between IOLTA accounts and accounts of non-IOLTA customers, and that these factors do not include that the account is an IOLTA account.”)
  • Illinois Supreme Court Rule 1.15(f)(5) (“Each lawyer or law firm shall direct the eligible financial institution to remit monthly earnings on the IOLTA account directly to the Lawyers Trust Fund of Illinois. For each individual IOLTA account, the eligible financial institution shall provide: a statement transmitted with each remittance showing the name of the lawyer or law firm directing that the remittance be sent; the account number; the remittance period; the rate of interest applied; the account balance on which the interest was calculated; the reasonable service fee(s) if any; the gross earnings for the remittance period; and the net amount of earnings remitted. Remittances shall be sent to the Lawyers Trust Fund electronically unless otherwise agreed. The financial institution may assess only allowable reasonable fees, as defined in paragraph (j)(8). Fees in excess of the earnings accrued on an individual IOLTA account for any month shall not be taken from earnings accrued on other IOLTA accounts or from the principal of the account.”)